Contractual Disclosure facility is an opportunity provided to those who have been involved in tax fraud to come clean and disclose their fraud before the HM Revenue and Customs (HMRC). Under the CDF, a person can either directly take the initiative to contact the HMRC and confess to the tax fraud that he or she has committed. In case the person fails to do so, they may be contacted by the HMRC via a letter giving them the option to accept, disclose, or deny being involved in any form of tax fraud. The letter sent by the HMRC would typically include the following –
- Acceptance letter
- Rejection letter
- Disclosure form
- Copy of Code of Practice – 9 (COP9)
A person can either accept the letter and disclose the details of the fraud committed including the place of fraud, time frame of fraud, and amount involved in fraud, or, the person can reply with the rejection letter denying any form of involvement in tax fraud.
Owning up to tax fraud with HMRC
In case one agrees to enter a contract with the HMRC under CDF, then the latter too agrees to not criminally investigate the applicant for their deliberate acts that resulted in tax loss. Under the contract, HMRC offers the applicant a period of 60 days to make full and complete disclosure of all acts, periods, amounts and other relevant details of the tax fraud in question. Along with the acceptance and disclosure forms, a person is also required to send across a statement accepting that all information disclosed is true and complete.
Rejecting the CDF Offer of HMRC
In case a person chooses to reject the offer and deny being involved in any tax fraud, then the HMRC has the complete right to investigate into the person’s taxes to the extent of criminal prosecution.
Upon submitting the rejection letter, a representative from the HM Revenues and Customs can be expected to contact the person in question explaining the next course of action.
A similar procedure will be followed by the HMRC in case the person chooses to not reply to the CDF offer as the case will be seen by the HMRC as a sign on non-cooperation.